The other day I was on Hong Kong radio (RTHK) talking about a controversy that has flared up in the Chinese film industry, reminiscent of such epic cinematic battles as Godzilla vs. Mothra and Alien vs. Predator. China Film Group, which produces movies and also holds a monopoly on the distribution of foreign films, has decided to yank James Cameron’s Avatar off over 1,600 2D cinema screens across China to make way for its own Chinese-themed bio-pic Confucius, staring Chow Yun-fat (Avatar will continue to be shown on over 800 3D screens). The move, which went into effect yesterday (Jan. 23), unleashed a flurry of angry commentary from China’s “netizens” amid accusations of censorship, protectionism, or both.

I’ve never hesitated to criticize China when warranted, but as I told radio listeners, I’m far from sure there’s a clear-cut case for either charge here.

The reason everyone is paying so much attention to this decision — besides their interest in seeing Avatar — is because of a major ruling handed down by the WTO last year. In response to a petition brought by the U.S., and supported by the EU and Canada, the international trade body ordered China to open up its media markets and, in particular, loosen the exclusive grip that state-owned enterprises like China Film Group hold over movie distribution (notably, the ruling did not strike down China’s authority to restrict films in order to protect “public mores”). China appealed the decision, but just before Christmas the WTO rejected that appeal. However, it did not outline what specific steps China needed to take to implement the ruling, and everyone is watching to see how China handles the issue.

Viewed in this context, it’s hard to see how Avatar is getting a raw deal. The movie was brought to China under the old system, so its treatment is not necessarily a sign of things to come. Even so, for a foreign movie, Avatar enjoyed unprecedented access to Chinese audiences over the popular New Year’s period, which traditionally has been the exclusive preserve of domestic films. According to one report I read, China has approximately 5,300 movie screens nationwide, and Avatar has been showing on over 2,400 — nearly half of them. The film grossed over US$ 80 million, setting a new box office record in China, a market where most movies — foreign and domestic — are readily available for less than $1 on pirated DVD or free download from the Internet. The situation may not be ideal, but compared to the past — the only benchmark that matters as China moves to open its markets — the treatment of Avatar marks a big improvement.

More importantly, from a financial point of view, Avatar will continue to be shown on nearly all of China’s 800+ 3D and IMAX screens. Even though they account for just 1/3 of the screens Avatar has been appearing on, they’ve generated 2/3 of box office revenues, and will continue doing so through the popular Chinese New Year season. The whole attraction of Avatar, after all, is seeing it in 3D — let’s face it, if you’re in China, and you’re really willing to watch it in 2D, you’re probably better off watching a fake DVD or download than trekking out to the cinema.

The charge that has really inflamed online forums, though, has been censorship. Several Chinese bloggers have noted parallels between the movie’s theme — the uprooting of a native people by ruthless developers — and the sensitive issue of forced evictions of peasants and homeowners in China. A columnist with China Daily wrote that “All the forced removal of old neighborhoods in China makes us the only earthlings today who can really feel the pain of the Na’vi.” Seizing on this point, some observers have concluded that the Chinese government pulled Avatar because it was raising uncomfortable social and political issues.

I find this unlikely. First of all, if this were a notion that really terrified the Chinese government, we wouldn’t be reading about it in China Daily, the government’s official English-language newspaper. Second, if officials really were surprised by the reaction (after giving it an all-clear initially) and wanted to ban the movie, why wouldn’t they pull it from theaters completely? The film will still be playing on over 800 screens across the country. If you want to watch Avatar in China as it was meant to be seen — in 3D — nobody’s stopping you.

I’m not saying that the decision to partially yank Avatar was a “purely commercial decision,” as China Film Group executives claim — at least in the legitimate sense they intend. There’s a potential conflict of interest in the company’s dual role — controlling film distribution, on the one hand, and making films, on the other. That same conflict used to exist in the United States, when the big Hollywood studios owned most of the theaters. That’s why in 1948, the U.S. Supreme Court (in United States v. Paramount Pictures) ordered the studios to divest their cinema holdings on antitrust grounds. They’ve been run as separate businesses ever since. As long as this conflict continues to define the Chinese film industry — and as long as the line between state censors and the state-owned film industry remains blurred — people will inevitably wonder at the real motivation behind this kind of “business” decision. And that’s why the implementation of last year’s WTO decision, which is supposed to grant foreign film makers freer access to Chinese audiences, will be so important to watch.

Readers interested in another well-informed perspective on this story might want to check out this blog entry by Professor Stanley Rosen, the director of the East Asian Studies Center at the University of Southern California.

As always, I find your analysis interesting. And thanks for the link to the China Beat. Always like finding new sites where I can learn. I do want to disagree with one point you make, but will keep it brief as it is not central to your post. This kind of thinking has to stop:

“but compared to the past — the only benchmark that matters as China moves to open its markets”

If China really seeks to be a leader on the world stage, that approach does not suffice. Either China moves toward norms found in the developed world or there will be problems. Given the economic environment, tolerance for the export machine,among other things, is diminishing rapidly.